Fiat could seek merger, listing with GM Europe

Italy's Fiat SpA could seek a merger of its auto group with General Motors Corp's Europe unit, then spin off the combined company and list it, Fiat said on Sunday.

Fiat Chief Executive Sergio Marchionne, fresh from a partnership with ailing U.S. automaker Chrysler, will meet German government ministers on Monday to discuss a bid for German car maker Opel, part of GM Europe.

Fiat's board met on Sunday to review the Chrysler deal and back Marchionne in weighing a potential merger of Fiat's auto group, including the Chrysler interest, with GM Europe into a new company, Fiat said in a statement.

As part of this process, the Group would evaluate several corporate structures, including the potential spin-off of Fiat Group Automobiles and the subsequent listing of a new company which combines those activities with those of General Motors Europe, it said.

A combined company would have yearly revenue of about 80 billion euros ($106.3 billion), Fiat said.

The statement did not mention Opel, which makes up 80 percent of GM Europe's revenue. Under a GM restructuring plan, Opel, including British affiliate Vauxhall, would be spun off.

LONG-TERM STRATEGY

Fiat is set on acquiring Opel after it struck a last-minute deal to buy an initial 20 percent of Chrysler on Thursday, just ahead of the deadline set by the Obama administration to cement a partnership.

German Economy Minister Karl-Theodor zu Guttenberg said on Sunday that Fiat -- and any investor -- had to present a solid long-term strategy to keep Opel plants open to obtain German government support.

We will not enter into any financial adventure with taxpayer money, Guttenberg said in an interview with Bild am Sonntag newspaper.

Marchionne will be in Berlin to meet Guttenberg and Foreign Minister Frank-Walter Steinmeier, the chancellor candidate for the Social Democrats in September's election. Steinmeier has spearheaded government efforts to keep Opel alive.

Aside from Fiat, Austrian-Canadian car-parts maker Magna International Inc has also expressed interest in Opel. Guttenberg said on Tuesday Magna had presented the rough outlines of a rival offer to acquire Opel.

Marchionne has said Fiat needed a partner to reach output of 5.5 million to 6 million units a year, the scale he believes necessary to survive the car industry crisis.

Opel staff, union leaders and some political leaders have reacted with reservations to Fiat. Klaus Franz, works council head of Opel and a supervisory board member, has said parties other than Fiat and Magna were interested in Opel.

Opel, hit by a slump in demand due to the global downturn, has four plants in Germany and employs about 25,000 workers there. Thousands more jobs at suppliers are at stake.

German magazine WirtschaftsWoche cited sources close to the talks as saying Fiat had made an offer for Opel of less than 1 billion euros, which GM considered inadequate.

The report said it was not clear if the original offer had since been improved. A spokesman for Fiat declined to comment on the report and GM could not be reached for immediate comment.